This is Femi from Hipmob: we looked at this more like instant search results (similar to what most search engines do already) where the server updates the results as the user types into the query box. The human operator does increase the privacy questions, though.

Is an application that spies on your use of that application still spyware? Presumably it's in the EULA somewhere. Personally I label spyware as something that spies on other parts of your system, not itself.